Charitable Lead Trusts

A charitable lead trust is a trust that allows you to use assets you own to provide an income stream to the Texas Woman’s University Foundation to benefit TWU for a set number of years. When the trust ends, the assets return to you or your loved ones. This trust is called a lead trust because the charity leads off by receiving income payments during the trust term.

Grantor Lead Trust

You transfer cash or other property to a trust that makes payments to the TWU Foundation for a set period of time. You decide the time period and the payout rate the trust will use. At the end of the trust term, the trust distributes the assets back to you.

Benefits of the Grantor Lead Trust are:
(1) You make a significant impact on the future of Texas Woman’s University;
(2) You are entitled to an income tax deduction for the present value of the income payments to the TWU Foundation over the trust term and you receive this deduction in the year the trust is created; and
(3) Your assets are returned to you when the trust ends.

Non-Grantor Lead Trust

The non-grantor lead trust works much like the grantor lead trust during the trust term. However, when the trust term ends, the assets pass to your heirs or other loved ones instead of reverting back to you.

Donors interested in non-grantor lead trusts are generally charitably-minded individuals who have larger estates and are looking for ways to reduce or eliminate gift or estate taxes. Generally, income tax advantages are not a part of this plan. With a non-grantor lead trust, the donor would not be taxed on the income; consequently, donors often use appreciated assets to fund non-grantor lead trusts.

Donors who create lead trusts are choosing to let a significant part of what they cannot keep pass to charitable organizations like the TWU Foundation instead of passing to the federal government in the form of gift or estate taxes.

Benefits of a non-grantor lead trust are:
(1) You make a significant impact on the future of Texas Woman’s University;
(2) You can pass substantial assets to your heirs while greatly reducing or even eliminating gift or estate taxes you would otherwise pay; and
(3) If there has been growth in the principal during the trust term, this growth also passes to your heirs free of gift or estate tax.